Preserving Your Family's Wealth While Planning for Medicaid: A Brooklyn Family's Guide

I'll never forget the day Maria walked into our Brooklyn office, visibly shaken. She'd just visited her mother at a nursing home in Bay Ridge, where the administrator handed her a bill for $15,000—for just one month of care. "I can't let my mother lose everything she and my father worked their whole lives to build," she told me, her voice trembling. "But how do I pay for her care?"

This conversation happens in my office nearly every week. Middle-income families throughout Brooklyn, Queens, and Staten Island face an impossible choice: provide quality long-term care for aging parents or preserve the family wealth that represents decades of hard work and sacrifice.

The good news? You don't have to choose. With proper Medicaid planning, you can protect your family's assets while ensuring your loved ones receive the care they deserve.

Understanding the Real Threat to Your Family's Wealth

Before we dive into solutions, let's be honest about what we're up against. Long-term care costs in New York are staggering. A private nursing home room in Brooklyn can easily run $150,000 to $180,000 per year. Even home care assistance, which many families prefer, costs $30 to $40 per hour—and that adds up quickly when someone needs round-the-clock support.

Without planning, these costs force families into what's called "Medicaid spend-down." Essentially, you're required to deplete nearly all your assets—your savings, investments, even your home in some cases—before Medicaid will help cover long-term care costs. For middle-income families who've worked hard to build financial security, watching a lifetime of savings disappear in just a few years is heartbreaking.

But here's what most families don't realize: Medicaid spend-down isn't inevitable. With the right strategies implemented at the right time, you can legally protect your assets and still qualify for Medicaid benefits.

The Five-Year Planning Window: Your Most Powerful Tool

The most important concept in Medicaid planning is the "five-year look-back period." When you apply for Medicaid, the government reviews your financial history for the previous 60 months, looking for any assets you've transferred or given away. If they find transfers made for less than fair market value, you'll face a penalty period where you're ineligible for benefits.

I know what you're thinking: "Five years? That seems so far away!" But here's the reality I share with every client—the best time to start Medicaid planning was five years ago. The second-best time is today.

Let me share another story. Robert, a retired transit worker from Bensonhurst, came to see me when he was 68 and perfectly healthy. "My kids think I'm being paranoid," he admitted. "But I watched my brother lose his house to nursing home costs, and I refuse to let that happen to my family."

Robert set up a Medicaid Asset Protection Trust, transferring his home and substantial savings into the trust while retaining the right to live in his house and receive income from his investments. When he needed nursing home care at age 75—seven years later—his assets were completely protected. His children inherited everything he'd worked for, exactly as he intended.

That's the power of planning ahead.

Medicaid Asset Protection Trusts: Your Primary Shield

An irrevocable Medicaid Asset Protection Trust (MAPT) is the gold standard for preserving family wealth. Here's how it works:

When you create a MAPT, you transfer assets—your home, savings accounts, investment portfolios—into the trust. These assets are no longer technically "yours" for Medicaid purposes, which means they won't count against you when determining eligibility. You can still receive income generated by the trust assets, and after your passing, whatever remains goes to your designated beneficiaries, not to the state.

The catch? Once assets are in the trust, you can't easily take them back. That's what makes it "irrevocable." And those assets must remain in the trust for at least five years before they're fully protected from Medicaid's look-back period.

In my nearly 30 years practicing elder law in Brooklyn, I've seen these trusts literally save families hundreds of thousands of dollars. But they're not right for everyone, and timing is critical. You need to transfer assets while you're still healthy and have enough other resources to live comfortably, because you're giving up direct control of those assets.

Converting Countable Assets to Protected Ones

Not ready to commit to an irrevocable trust? There are other strategies to reduce your "countable assets"—the money and property Medicaid considers when determining eligibility.

Some assets are exempt from Medicaid calculations, meaning you can keep them and still qualify for benefits. These include:

• Your primary residence (with some equity limits)

• One vehicle

• Personal belongings and household items

• Prepaid funeral and burial arrangements

• A modest amount in checking and savings accounts (typically $2,000 for individuals in New York)

Smart asset conversion means using your countable assets to purchase exempt ones. I've helped families pay off mortgages, make necessary home repairs (like installing walk-in showers or wheelchair ramps), purchase reliable vehicles, and prepay funeral expenses—all legitimate ways to reduce countable assets while improving quality of life.

One couple from Sheepshead Bay used this strategy brilliantly. They had $80,000 in savings that would have disqualified them from Medicaid. Instead of spending it down on nursing home bills, they paid off their remaining mortgage, made essential home modifications so the wife could stay home longer, and prepaid both their funeral arrangements. These were purchases they would have needed to make eventually anyway—but by doing them strategically, they reduced their countable assets while actually improving their situation.

Spousal Protections: Keeping the Healthy Spouse Secure

If you're married and one spouse needs long-term care, special rules protect the healthy spouse (called the "community spouse") from impoverishment. You don't have to deplete all marital assets before the ill spouse qualifies for Medicaid.

The community spouse can typically retain:

• The couple's home

• One vehicle

• A protected amount of assets (called the Community Spouse Resource Allowance), which in New York can be over $150,000 depending on circumstances

• A minimum monthly income allowance to cover living expenses

These protections are substantial, but many families don't realize they exist or don't know how to maximize them. The rules are complicated and vary based on your specific situation, which is why personalized legal guidance makes such a difference.

Crisis Planning: When You Don't Have Five Years

What if you need care now and haven't done any advance planning? All is not lost.

While proactive planning is always preferable, "crisis Medicaid planning" can still protect a portion of your assets even when long-term care is immediately needed. Strategies include:

Medicaid-Compliant Annuities: These convert a lump sum into an income stream, removing it from countable assets while providing funds to cover care costs during any penalty period. The annuity must meet specific requirements—it has to be irrevocable, non-transferable, actuarially sound, and provide equal payments with no balloon or deferred payments.

The "Half-Loaf" Strategy: This involves transferring about half your non-exempt assets to protect them for your heirs, then using the remaining half to pay for care during the resulting penalty period. It's a compromise—you'll lose some assets, but you'll preserve far more than you would through complete spend-down.

Caregiver Agreements: If a family member has been providing care, a formal personal care agreement can compensate them at fair market rates. This legitimately converts assets into payment for services already rendered, potentially reducing countable assets without triggering penalties.

Just last month, I worked with a family in Midwood facing exactly this situation. The father needed immediate nursing home placement, and they had about $220,000 in savings that would normally be completely spent down. Using a combination of spousal protections, a Medicaid-compliant annuity, and asset conversion strategies, we were able to protect more than $140,000 for the healthy spouse and their children.

Crisis planning can't save everything, but it's dramatically better than doing nothing.

The Critical Importance of Legal Guidance

I need to be direct with you: Medicaid planning is complex, the rules change frequently, and mistakes can be catastrophic. I've seen well-intentioned families try to protect assets on their own, only to disqualify themselves from Medicaid for years because they didn't understand the technical requirements.

For example, many people think they can just "give away" their house to their children to protect it. But an unplanned transfer within the five-year look-back period triggers penalties that could leave you unable to pay for care and ineligible for Medicaid assistance—potentially for years.

Or consider this common scenario: someone creates a revocable living trust thinking it will protect their assets. It won't. For Medicaid purposes, assets in a revocable trust are still considered yours because you maintain control. Only an irrevocable trust provides protection, and even then, it must be structured correctly.

At Alatsas Law Firm, we've spent nearly three decades helping Brooklyn families navigate these exact challenges. We understand the unique concerns of middle-income families in our community—the hard-working transit workers, teachers, small business owners, and municipal employees who've built modest but meaningful wealth through lifetimes of sacrifice.

Our approach is deeply personalized because no two families are identical. Your assets, family dynamics, health situation, and goals are unique, which means your Medicaid planning strategy should be too.

Starting Your Medicaid Planning Journey Today

Whether you're 60 or 80, healthy or facing health challenges, now is the time to explore your options for preserving your family's wealth.

Here are practical steps you can take right now:

Inventory your assets: Make a complete list of everything you own—your home, vehicles, bank accounts, investments, retirement accounts, life insurance policies, and personal property. Knowing what you have is the first step in protecting it.

Understand the timeline: If you're healthy and retirement age, starting a five-year plan now gives you maximum protection. If care needs are more immediate, explore crisis planning options.

Gather your documents: Collect deeds, account statements, insurance policies, previous tax returns, and information about any gifts or transfers you've made in the past five years.

Consider your family's needs: Think beyond just Medicaid eligibility. How do you want your assets distributed? Who should make decisions if you can't? What matters most to you about your legacy?

Seek experienced guidance: Medicaid planning isn't a DIY project. The rules are complex, the stakes are high, and personalized professional advice is essential.

Your Family's Legacy Deserves Protection

Maria, the woman I mentioned at the beginning, came back to our office six months after our initial meeting. Her mother's care was now covered by Medicaid, and the family home—where Maria had grown up, where her children visited their grandmother every Sunday—was protected in a properly structured trust. "I only wish we'd done this sooner," she told me. "But at least now I know my mother's legacy will pass to her grandchildren, just like she always wanted."

That's what Medicaid planning is really about. It's not about gaming the system or hiding assets. It's about using legal strategies to ensure that a lifetime of hard work benefits your family, not just institutional care facilities. It's about dignity, security, and leaving the legacy you've worked so hard to build.

The families we serve in Brooklyn, Queens, and Staten Island are the backbone of New York—hardworking people who've played by the rules their entire lives. You deserve to protect what you've built, and you deserve to receive quality care when you need it.

The question isn't whether you should plan for Medicaid—the question is when you'll take the first step. Your family's financial future may depend on the choice you make today.